JPMorgan Chase to lay off 730 in San Diego

JPMorgan Chase said Thursday it plans to lay off 730 San Diego workers from its loan-servicing business as home refinances and foreclosures dry up.

The local layoffs, to be completed by 2014, are part of a national plan announced six months ago by JPMorgan Chase to cut 15,000 jobs from its division that manages and receives borrowers' mortgage payments. The layoff is the largest workforce reduction in San Diego County so far through 2013.

The announcement comes at a time when the housing market is improving, foreclosures are plummeting and mortgage refinancing is waning.

Like other banks, JPMorgan Chase significantly ramped up loan servicing during the economic downturn to address an unprecedented onslaught of clients defaulting on their mortgages. It inherited the San Diego operation in 2008 - the middle of the Great Recession - after acquiring Washington Mutual. The need for mortgage services continued to rise as an increasing number of consumers refinanced their home loans to take advantage of record-low mortgage rates.

But mortgage delinquencies have since plummeted due to an improving housing market, resulting in a smaller foreclosure inventory and a diminishing need for loan servicing, said bank spokeswoman Suzanne Ryan. Also, applications for refinancing have fallen sharply from a year ago in light of creeping mortgage rates. Ryan said JPMorgan Chase has 700 job openings in California and would be working to reassign some employees.

"We are responding to our customers’ changing needs," Ryan said. "Fewer homeowners are struggling with their mortgages and many people have already refinanced, taking advantage of the stronger economy and historically low rates. We will work with affected employees to find openings at Chase or other local companies."

San Diego County foreclosures are down about 92 percent from the height of the distress market in 2008. Refinancing applications have declined almost 60 percent year-over-year, show nationwide numbers from the Mortgage Bankers Association.

"It's now a harder business to break into when the (refinancing) volume has dropped off," said Todd Pianin, president and founder of local boutique mortgage company Samuel Scott Financial Group.

While layoffs are never good news, they signal a market shift from recasting mortgages to more of a purchase-mortgage market. Rising prices have helped push homebuyers away from the fence and into the market. The median price for all San Diego County homes sold in June reached $416,500, a 5-1/2 year high.

"It's just a sign of the cycle changing," Pianin added.

JPMorgan will eventually close its entire office at 10790 Rancho Bernardo Road. The cuts will begin in 90 days, but some employees could be retained for up to a year. Layoffs will be complete by 2014. The bank held an employee meeting inside its shaded parking garage around noon on Thursday.

The move will take a chunk out of San Diego County's credit intermediaries and related activities sector, which are businesses that take deposits and make loans, said Lynn Reaser, chief economist at Point Loma Nazarene University. In June the sector employed 20,000 people. That's 500 more than the field employed in June 2012, but down from the 25,100 who worked in the industry in June 2007, the last summer before the Great Recession, the Employment Development Department reports.